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At the time this article is published and read, we will be in the middle of the fourth quarter of a very turbulent year for the PVF industry. The COVID-19 pandemic has had a devastating impact on the demand for energy, including electricity, oil, gas and liquid natural gas.
Subsequently, the demand for PVF products has suffered due to the resulting delay in ongoing construction, the postponement of planned projects and the cancellation of megaprojects.
Casualties from the pandemic have spread across all PVF industry sectors, including upstream, midstream, downstream, EPCs, distribution, equipment suppliers and manufacturers.
Commercial construction markets are feeling the pain along with their industrial counterparts. Competition is fierce for the projects moving forward, with many companies accepting lower-cost offshore materials.
Some risks accompany the use of these low-cost offshore materials due to low quality and fraudulent reporting practices. The point of purchase on the front end looks good compared to domestic.
However, these savings are offset by the increases in back-end installation costs due to out-of-tolerance issues and liability exposure. This emphasizes the importance of re-shoring your supply chain with high-quality and completely traceable domestically manufactured products.
With all this negativity prevailing in the market, many projects are set to start up during the fourth quarter, with some in progress as of this writing.
On the brighter side, Stanley analysts cite the potential for the “tightest winter gas market of the past decade.” Under the firm’s 2021 natural gas forecast of $3.25/MMBtu, gas drillers would generate an average free cash flow yield of 16 percent, above the 12 percent average for oil-based peers.
U.S. automakers are experiencing dramatic increases in demand post-lockdown and are preparing for the startups of much-needed maintenance programs, previously delayed due to the pandemic, during this quarter.
Indiana leads among the industry states in total investment value (TIV) for fourth-quarter maintenance projects. The Honda Motor Co. accounts for the highest-valued projects. The semiannual maintenance shutdown at its automotive assembly plant in Greenburg, Ind., is scheduled for a one-week shutdown in December. This plant produces 250,000 Civic vehicles per year.
Allison Transmission’s Automotive Transmissions Plant 4 in Indianapolis, which manufactures transmission and hybrid-propulsion systems, and Pridgeon and Clay’s auto-stamping plant in Franklin, Ind., are each scheduled for one-week shutdowns in December.
Kentucky is the state with the second-highest number of fourth-quarter maintenance projects in the automotive industry. Ford Motor Co. has the two largest semiannual two-week shutdowns at its Kentucky truck plant and Louisville assembly plant, both domiciled in Louisville. The truck plant produces super-duty pickups (the Lincoln Navigator and the Ford Expedition SUV); the assembly plant makes the Escape SUV.
The state of Arizona seems to be a strong base for electric vehicle manufacturing. Nikola Motor Co. intends to start construction on an approximately 500,000-square-foot facility to produce hydrogen-electric semi-trucks in Coolidge, Ariz. This is the first phase of the project; the second phase will increase the footprint to 1 million square feet, allowing the company to produce 35,000 vehicles per year.
In the U.S. Northeast (Delaware, New Jersey, New York and Pennsylvania) and New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), several power industry projects are set to start up during the fourth quarter. Industrial Info is tracking more than $1.6 billion in planned fourth-quarter power starts in the region, including wind, natural gas, hydropower and solar.
A 175-MW combined cycle plant in Towanda Township, Pa., is scheduled to kick off this quarter. The facility, owned by Gateway Green Energy Holdings, will include two 50-MW GE combustion turbines with heat recovery steam generators and one GE steam turbine generator.
Other projects in the gas-rich state of Pennsylvania include the conversion of two coal-fired units at the Montour power plant in Washingtonville to be co-fired with natural gas.
The U.S. Southeast (Alabama, Georgia, Mississippi, Tennessee and Puerto Rico) is planning for more the $3.5 billion in fourth-quarter starts (per Industrial Info) of industrial manufacturing projects. They include automotive assembly, ports and data centers.
The state of Georgia leads — in term of TIV — with more than $1.4 billion in planned construction starts, the largest of which is South Korean company SK Innovation Co. Ltd.’s grassroot automotive lithium-ion battery manufacturing plant located in Commerce, Ga. The facility is a 1.5 million-square-foot manufacturing plant to produce batteries for Ford Motor’s electric vehicle manufacturing plant in Kentucky.
Data Center Projects
Data centers have become big business in the United States; Alabama has a fourth-quarter startup on Phase II of DC Blox’s center in Birmingham. The project consists of a 30,000-square-foot building addition on what could be a 60 MW, 200,000-square-foot campus.
FedEx Corp. is modernizing its World Hub in Memphis, Tenn., and is constructing a new bulk truck loading building in the fourth quarter. A 65,000-square-foot structure will be built and include an automated sort system, two levels of sort conveyors and office space. The total investment value is $85 million and is expected to be completed by the end of 2021.
The Jacksonville (Fla.) Port Authority plans to begin construction on the expansion of the Blount Island Terminal by increasing the facility’s space to 80 acres, along with performing upgrades to allow two post-Panamax vessels (longer than 965 feet) to use the terminal at the same time. The project is scheduled to be in service by the end of 2021.
The Rocky Mountains Region (Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming) expects $3.5 billion in fourth-quarter industrial manufacturing project starts. They include data center, vehicle manufacturing, light rail and more.
Amazon will begin construction on a grassroot 885,000-square-foot fulfillment center in Goodyear, Ariz.
Facebook will start construction on a fourth building at its site in Los Lunas, N.M., to expand its data services. The facility is scheduled to be completed and in use by the end of 2021.
These projects are just a brief overview of the construction opportunities during the fourth quarter, indicating bright spots in the PVF marketplace.
PVF Roundtable News
The PVF Roundtable’s mission is to recruit and provide educational assistance to incentivize young people to enter our industry to replace retiring skilled workers and managers.
Also, it provides a platform for the sharing of ideas, information and networking with associates from all sectors of the PVF industry.
As a member of the board of directors of the PVFRT, and I believe I speak for all, we thank all our sponsors, especially our key sponsors (Weldbend, Elite Supply, Gibson Products, Ferguson and MRC), all our volunteers and our membership for their continued support in these turbulent times to make our mission possible.
Several of our networking meetings and fund-raising events — including the golf tournament and Trout Blast — were canceled due to the weather and the devastating effects of the coronavirus pandemic.
The networking meeting and Christmas Toys for Tots gathering is tentatively scheduled for December 2020. Due to the restrictions on assembly generated by the COVID-19 pandemic, we suggest you regularly refer to the PVFRT website, www.pvf.org, for any announcements regarding the date or possible cancellation.